October 17, 2017

Putin wants Russian-styled cryptocurrency, the ‘CryptoRuble’

Business

October 17, 2017

A Kremlin-backed digital currency is coming to Russia, making it the first country to launch a cryptocurrency initiated by the government.

President Vladimir Putin announced at a closed-door meeting over the weekend that the state is making its own version of a cryptocurrency, which they will call the “CryptoRuble,” Russian news outlet AIF reported, quoting Minister of Communications Nikolai Nikiforov.

“I so confidently declare that we will launch a cryptor for one simple reason: if we do not, then in two months our neighbors in the Eurasian Economic Community will do it,” the minister said.

Like the digital currencies existing today, which the Kremlin has yet to “take control” of, the CryptoRuble will be underpinned by the blockchain technology. The state-backed cryptocurrency can also be exchanged for rubles, but holders will have to pay a 13 percent tax if they are unable to explain where they got their CryptoRubles. The same tax is also levied to any earned difference from buying or selling the cryptocurrency, according to Nikiforov.

Last week, Putin called a meeting with the government ministers, who have agreed to let the state take control of “the process of cryptocurrency emission and its circulation.”

Although concerned with the “serious risks” cryptocurrencies supposedly bring, Putin recognized that digital currencies are gaining worldwide popularity as they “have already become or are turning into a full-fledged payment instrument and an investment asset in certain countries.”

Nikiforov expects “the CryptoRuble will be issued quickly,” and its introduction will “streamline the payment of personal income tax” in the country. The minister, however, stressed that the CryptoRuble “would not equal the legalization of Bitcoin and other cryptocurrencies.”

For years, the Ministry of Finance of the Russian Federations has been very vocal in opposing the adoption of digital currency in the country. Recently, however, Finance Minister Anton Siluanov finally admitted that cryptocurrencies “are real” and that “there is no sense in banning them,” although “there is a need to regulate them” because of their volatile nature.

“Cryptocurrencies are a fact of life … We need to create a legal framework for these operations, we need to control these operations if these operations contravene the law, including money laundering legislation,” Siluanov told CNBC.